Systematic Stock Investment Plans

Invest in suitable installments on a regular basis-this in short, is the Systematic Investment Plan (SIP) Many can not afford or do not wish to invest in lump sum. Compare it to the recurring deposit scheme with a Commercial Bank. Though this plan is mostly associated with Mutual Funds, it suits as well for buying shares. By exercising this option it is convenient for an investor to reach the desired goal in the set time-frame.

These investment plans are managed by brokers, a team of experts and other service providers. The investor has the advantage of professional management of the funds, less risk, portfolio diversification depending upon the market conditions, saving in trading costs, flexible liquidity etc.

This is a time-honored strategy to assist the investors to amass wealth methodically. The investor is free from the tensions of the volatility of the market. Someone else is taking care of the challenges posed by the market. One need not worry about the entry point and providing stop loss orders. Share to share concerns that are part of the independent portfolio management are not there.

Getting organized in the share market is the stepping stone to success. When you are disciplined and systematic, it goes without saying that you are cool and you will not take rash and loss-prone decisions. You are not in a hurry to conquer the market. Any investment guru will advise you to be systematic in your approach. A disciplined investor is not overawed by the boom in the share market; he proceeds according go his plan and investment strategy. He treats the Bull Run and bearish tendencies in the market with equal respect and knows how to earn profits with his methodical, clever moves.

When an investor is inclined to do systematic investing, he invests a fixed amount in the same security for a long period of time, at regular intervals. He is not worried about the fluctuations in prices. So he goes on accumulating more units of the security. When the price of the security is low, the investor is able to secure more units of the same security.

With this plan, many obligatory functions that every individual has to perform during the course of life are taken care of. A small businessman or an individual in service can not think of making lump sum payment, for buying a house or financing the higher education of children. One needs to create goal-oriented savings. Investment decisions must be made depending on the goal and the time limit at your disposal to achieve that goal.

It is not absolutely necessary that you invest the fixed amount that you have decided to invest every month in share of any one company. Depending upon the amount, you can create a portfolio and invest in the share that is profitable to you on the date fixed by you for such investment. Watch the portfolio with due regard to the prevailing market conditions, and make suitable adjustments, if necessary. Your discipline relates to the fixed amount that you have decided to investment and let that not vary.

This plan inculcates discipline with the investor for regulating issues where money is needed in lump sum. As the saved amount grows, one feels more confident.

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